Why the crypto market cycle may be in the “disbelief” phase
All markets are cyclical, but few show such recurring cyclical performance as the crypto market. Bitcoin, for example, accumulates every four years like clockwork around the halving event – an event that halves the new flow of supply.
But in a new chart, the total cryptocurrency market capitalization is closely following a “psychology of a market cycle” chart, which may indicate that the market is currently in the “disbelief” phase.
Crypto Market Cycles Explained
Cyclic behavior is everywhere. The sun rises and sets, the seasons change, and the planets orbit the sun. Almost all fashion styles fall out of favor only for several years later to once again become the hottest new trend.
Financial markets that were once profitable and exciting can become painful to watch. At the point of the most extreme pain, anger and depression, a new uptrend begins from a bear market while most people are frozen in fear. This part of a market cycle is called “disbelief” and this is exactly where the crypto market may be according to the chart below.
Is crypto in disbelief? | TOTAL on TradingView.com
“A Sucker’s Rally” or “Disbelief”
The comparison begins at the peak of euphoria. Elon Musk called himself the “Dogefather” on Saturday Night Live and Mark Zuckerberg’s sister made horrifying crypto parody videos. Everyone should be able to do it.
But they weren’t going to make it, and they didn’t quite know it yet – the crypto winter was just beginning. After months of easy money, it’s just as easy to become complacent. Many even bought the dip. This made things worse psychologically as new lows began and the anxiety started.
Denial turned to panic and then quick capitulation as the LUNA collapse wiped out 3AC and started the first contagion in the crypto market. The domino effect brought asset prices down enough to cripple FTX and put Sam Bankman-Fried behind bars. “Why did the authorities allow this to happen,” reads a caption on the chart. Sounds familiar?
Who wouldn’t be angry? Investors are out billions of dollars between FTX, BlockFi and so many others. It’s a depressing thought. According to the chart, things may soon improve across crypto, but will anyone believe it?
The chart itself and the psychology of each stage of the market cycle follow shockingly well. The current sentiment across crypto is that the recent upside is nothing more than a “sucker rally.” If this chart and psychology is correct, few will be greedy enough while the crypto market has been scared.
“How did the government let this happen?” was a fairly common response to the FTX collapse after the information came out. Is it time to start believing again? $TOTAL #Crypto pic.twitter.com/6HqjbsfRAK
— Tony “The Bull” (@tonythebullBTC) March 9, 2023
